“HSBC’s securitization practices contributed to a financial crisis that deeply harmed Massachusetts communities and caused families to lose their homes,” AG Healey said. “We will continue to help consumers who were sold toxic mortgages by these banking institutions and are pleased that this settlement will provide significant relief for families that have suffered harm from unsustainable subprime loans.”

While HSBC did not originate the subprime loans in this case, it did purchase these loans from subprime lenders and securitize them. As noted in the assurance of discontinuance, filed Friday in Suffolk Superior Court, the AG’s Office alleges that many of these loans were presumptively unfair under Massachusetts law because they had debt-to-income ratios over 50 percent, included substantial prepayment penalties, had loan-to-value ratios over 97 percent, and included other problematic features.

Under the terms of the settlement, HSBC will pay a $5 million payment to the Commonwealth and compensate governmental entities that allegedly suffered harm from HSBC’s actions, including cities and towns that incurred extra expenses due to the foreclosures caused by the unfair loans, such as Brockton, Lawrence, Lowell, Lynn, Springfield, and Worcester. The remaining $20 million will be made available to eligible homeowners for principal reductions and related payments on the loans of eligible consumers and to assist borrowers who suffered foreclosure.

More than 60 homeowners could be eligible to receive payments in Middlesex and Worcester counties under the HSBC settlement. Approximately 50 homeowners could be eligible to receive payments in Essex county. Approximately 25 homeowners could be eligible to receive payments in Bristol, Hampshire, Norfolk, Plymouth, and Suffolk counties. Eligible consumers will receive a notice from the Office of the Attorney General. Homeowners with questions should contact Attorney General’s Insurance and Financial Services Hotline at 1-888-830-6277.